Statement for the Record of C. Kent Conine

on behalf of the

National Association of Home Builders

 

Hearing on Critical Habitat Designations Under the

Endangered Species Act

 

Fisheries, Wildlife and Water Subcommittee

Senate Environment and Public Works Committee

 

United States Senate

Washington, DC

 

April 10, 2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman Crapo, and members of the Fisheries, Wildlife and Water Subcommittee, I am pleased to share with you the views of the National Association of Home Builders (NAHB) concerning the designation of critical habitat under the Endangered Species Act (ESA).  My name is Kent Conine.  I am a homebuilder and developer from Dallas, Texas, and the 2003 President of the National Association of Home Builders.  I submit this testimony on behalf of our 205,000 NAHB members.

 

NAHB’s membership consists of individuals and firms who develop land and construct homes and apartments, as well as commercial and industrial projects.  While our members are committed to environmental protection and species conservation, oftentimes well-intentioned policies and actions by regulatory agencies result in plans and programs that fail to strike a proper balance between conservation goals and needed economic growth.  In these instances, our members are faced with increased costs attributed to project mitigation, delay, modification, or even termination.  Within the context of the Endangered Species Act, these difficulties are often attributable to species listing and the designation of critical habitat.

 

When homebuilders develop land and construct homes and apartments, the process may occur within or adjacent to an area where there may be endangered or threatened species or their habitats.  As a result, in seeking to comply with the ESA, many of our members are prevented from developing their property or are required to submit to extensive mitigation requirements in order to move forward. 

 

Setting aside the community benefits of developing balanced neighborhoods, the economic impact of home building extends itself deep into the economy of the U.S. The economic activity generated by home building is three to four times the typical homebuyer’s down payment.  Hence, a typical $34,000 down payment on a new home generates nearly $160,000 in new economic activity (the underlying land value is subtracted from the calculation).  Many aspiring homebuyers, however, are just on the edge of being able to qualify for a mortgage and make the required payments.  Even a small change in home prices, interest rates or delays in construction can determine whether they can buy a home.

 

Home builders are generally entrepreneurial members of the small business community.  82 percent of home builders build fewer than 25 homes a year and 60 percent of our members build fewer than ten homes a year.  Many of these small-volume builders and subcontractors do not have the capital to withstand the devastating effects of an accidental or intentional error in an ESA decision. 

 

Therefore, NAHB believes the listing of species as threatened or endangered and the designations of critical habitat for those species must be based on reliable, accurate and solid biological and scientific data.

 

We wholeheartedly agree with the testimony put forth by Assistant Secretary Manson at this hearing, and echo his statement that “simply seeking additional funding for this program is not the solution.”  More money is not the answer to the ESA’s problems.  Rather, we believe it is time that serious thought and meaningful action is devoted to fixing the ESA and its administration of America’s endangered species. 

 

NAHB remains concerned that critical habitat has been and continues to be designated in vastly expansive swaths without conducting the rigorous scientific and economic analyses that Congress requires.  In general, we believe that there are four key reasons why critical habitat designations under the ESA are failing to be implemented as statutorily defined.  These four concerns, further expanded upon below, address both the breadth and basis of critical habitat designations for species listed under the ESA.   

 

1. Congress did not intend for critical habitat to encompass the species’ entire historic range or all potential habitat areas that the species may use.  Critical habitat is a more defined, smaller subset of the species’ geographic range.

 

The ESA directs that “critical habitat” can be designated in two types of “specific areas”: (1) Specific areas within the geographical area occupied by the species, if they contain biological features that are essential for the conservation and require special management considerations or protection; and (2) Specific areas outside of the geographical area occupied by the species if they are found to be essential for that species’ conservation.  In any case, critical habitat normally cannot include the entire geographic area that can be occupied by the listed species.

 

Courts have relied on these statutory provisions and decided that Congress intended critical habitat to be designated in terms of restricted geographic scope. Two particular cases have determined that “critical habitat” must only encompass areas which are “absolutely essential” to species’ survival.  See Northern Spotted Owl v. Lujan, 758 F. Supp. 621 (W.D. Wash. 1991) and Middle Rio Grande Conservancy Dist. v. Babbitt, No. CIV 99-870, 99-872, and 99-1445M/RLP (consolidated), at 17 (D.N.M. 2000).  These cases correctly stand for the proposition that critical habitat must represent a more narrow, carefully delineated segment of the overall historic, geographic, and potential range of the species. 

 

The legislative history bears this out.  NAHB believes that Congress intended “critical habitat” to be a narrower area than the species’ entire historic or geographic range.  When Congress enacted the ESA in 1973 and during subsequent amendments in 1978 and 1982, it emphasized the concern that critical habitat was being designated more broadly than the Act allowed.  Specific amendments in 1978 were intended to ensure that designated habitat did not encompass all land, air, and water environments of the species, but were instead limited to “essential areas” within those environments. 

 

Despite the clarity of the statute, however, geographic limitations are not always observed in practice.  The final critical habitat designation for the Southwestern Willow Flycatcher, for example, was written to include areas that “contain the remaining known southwestern willow flycatcher nesting sites, and/or formerly supported nesting southwestern willow flycatchers, and/or have the potential to support nesting southwestern willow flycatchers.” (62 FR 39133)

 

2. Critical habitat reflects a narrow concept that must be limited to “specific areas” that FWS finds are absolutely “essential” for species conservation, concepts that are oftentimes overlooked or ignored in critical habitat designations. 

 

The ESA defines “critical habitat” as:

 

“(i) the specific areas within the geographical area occupied by the species...on which are found those physical or biological features (I) essential for the conservation of the species and (II) which may require special management considerations or protection; or

 

(ii) specific areas outside the geographical area occupied by the species...[that]

are essential for the conservation of the species.” (16 U.S.C. §1532(5)(A).)

 

Two key phrases stand out in these statutory definitions. First, critical habitat contemplates “specific areas.” Second, those specific areas must be “essential for conservation.”

 

“Specific Areas”: In using this term, Congress strove for precision.  Regulators, affected municipalities, conservationists and property owners alike would all benefit if they knew, exactly, where the species is found.  Programs to conserve listed wildlife will be more efficient if stakeholders all know what areas, precisely, warrant heightened regulation and protection.   Recent history, however, seems to challenge this common sense approach. 

 

Of continuing concern for NAHB is the refusal of the Services to provide stakeholders with the specific locations where an endangered species may be known to exist, including the disclosure of unpublished and uncorroborated data used in the designation of critical habitat.  In the case of the Pygmy Owl, the U.S. Fish and Wildlife Service (FWS) failed to respond to a 1998 FOIA request and a 2002 court order to provide NAHB with information on all known numbers and locations of the Pygmy Owl.  Only recently, after four-and-a-half years of litigation, has NAHB finally acquired information on the location of Pygmy Owls in southern Arizona. 

 

Furthermore, some critical habitat designations have been criticized for reading the term “specific areas” out of the Act.  For example, the final designation rule for Pacific Northwest Salmon simply states that critical habitat covers “all river reaches accessible to listed [salmon] within the range” of the fish.  The Salmon final designation rule further states that critical habitat comprises “the water, substrate, and adjacent riparian zone” of over 150 watersheds, river segments, bays and estuaries throughout northern California, Oregon, Washington, and Idaho.  In the future the Services should strive to avoid the vague descriptions that characterize the designations for this and other species.  Such descriptions do little to provide insight to what specific areas may or may not be covered by a critical habitat designation. 

 

“Essential for Conservation”: The second key term in the ESA’s definition of critical habitat is “essential for conservation.”  The term “essential” is an important qualifier, and limits consideration of critical habitat to those areas that are absolutely necessary to achieve conservation to the point that the species no longer needs to be listed.  Congress’s use of the word “essential” in defining critical habitat comports with our first principle that designated areas are not as broad as geographic ranges but must be restricted to areas that are absolutely necessary and important to the species’ conservation.

 

The Fifth Circuit’s decision in Sierra Club v. FWS and NMFS (March 15, 2001) (hereafter, Sierra Club) should not be misinterpreted to ignore the terms  “specific areas” and “essential” in the Act’s critical habitat definition.  In opining on the “adverse modification” regulation, the Fifth Circuit held that Section 7 consultation is required “where an action affects recovery alone; it is not necessary for an action to affect the survival of a species.”  The court stated that the ESA “distinguishes between ‘conservation’ and ‘survival,’” and that “[r]equiring consultation only where an action affects the value of critical habitat to both the recovery and survival of a species imposes a higher threshold than the statutory language permits.” (Id.) 

 

Even if the Fifth Circuit is correct that consultation (under Section 7) can be triggered under a recovery standard independent from a survival standard, this does not mean that critical habitat must be defined (under Section 3) or designated (under Section 4) based on a broad recovery standard—one that would improperly encompass huge expanses of historic and potential habitat with nebulous parameters.  In other words, critical habitat is not habitat generally “for” recovery or generally “for” conservation.  Rather, critical habitat is restricted to “specific” areas that the Service determines are “essential” for conservation. 

 

Congress was clear in its determination that critical habitat should be composed of those areas that are found to be “essential for conservation” of a species.  To this end, NAHB is concerned that any legislation that would tie critical habitat designations to the recovery planning stage would sweep broader areas into the regulatory net than Congress intended.  If critical habitat were to be tied to a recovery plan, the boundaries of critical habitat areas would likely coincide with the larger area of “recovery habitat,” thereby raising the standard for designation.   Furthermore, the text of the ESA, legislative history, and case law all make clear that recovery plans serve as guidance documents, and do not have the force and effect of law.  If critical habitat—the designation of which does have regulatory impact—is to be determined as part of the recovery planning process, the unintended consequence would likely be that the elements of the recovery plan would be transposed as having binding, legal effect on private parties.

 

3. The “best available science” must provide the basis for the Services’ biological finding that “specific areas” are “essential” for conservation.  However, the Services have not always used the best available science to yield rational determinations of occupied and unoccupied areas.

 

The ESA requires that the Services use the “best available science” to make a determination of areas within the “geographic area” that are “essential to the conservation” of the species.  The U.S. Supreme Court has emphasized that the “best available science” standard ensures that the ESA is not implemented on the basis of mere guesswork.  Accordingly, only the “best available science” can support the Services’ findings that certain specific areas contain the biological features essential for the species’ conservation. 

 

Past, glaring examples of misconduct however do little to reinforce a sense of trust in the Service’s ability to make use of this scientific standard.  The admission of several Forest Service and FWS employees of planting false samples of Canadian lynx hair in Washington state national forests, as well as the use of faulty data of spotted owl habitat to block logging projects in California (which, as a result, resulted in the payment of $9.5 million in damages to a logging company), call into question the objectiveness of the science utilized by the Services.

 

In using the “best science available” standard prospectively, the Services must limit both the occupied and unoccupied areas to only those segments that are “essential for conservation.”  By doing so, the Services will ensure that the entire geographical area occupied or (unoccupied) is not designated.  In order to properly limit areas that are “essential for conservation” the Services should endorse a common sense, scientific approach to  “occupied” habitat.  Some past critical habitat designations have construed “occupied” too broadly, to avoid the necessary finding that certain unoccupied areas are deemed essential for conservation.

 

For example, 1.2 million acres of critical habitat were treated as “occupied” by 36 Pygmy Owls in southern Arizona.  Similarly, the final critical habitat rule for the Coastal California Gnatcatcher designates over half a million acres—513,650.  Yet, in the Gnatcatcher rule, U.S. FWS determined that the bird occupied only 54,000 acres.  It is inconsistent with the vision of Congress to protect 459,650 unoccupied acres—or 89% of the entire designation—as “critical” habitat. 

 

Under the Act “unoccupied” areas may also be designated as critical habitat—but only where the Secretary specifically finds that the unoccupied area is “essential to conservation.”  The Services have an affirmative obligation to find that unoccupied areas are “essential for conservation” before they are incorporated into a final critical habitat designation.  In short, the Services’ authority to designate “unoccupied” critical habitat areas is limited and exceptional, and must be supported by sound scientific data.  

 

4. Once the specific areas that are biologically “essential” for conserving the species is determined based on the “best available science,” an economic analysis must be completed to exclude any area from critical habitat if the benefits of such exclusion outweigh the benefits of designation.  In the past, economic analyses have failed to incorporate the direct, indirect, and cumulative impacts of critical habitat designations.

 

For years, the rallying cry of the regulated community has been to require the Services to conduct a thorough economic analysis on the impacts of critical habitat designations.  The ESA requires that the Services designate critical habitat based on the “best scientific data available and after taking into consideration the economic impact, and any other relevant impact, of specifying any particular area as critical habitat.”  FWS’s own regulations require the consideration of the “probable economic and other impacts of the designation.”  (50 C.F.R. § 424.19) 

 

However, in the past the Services have argued in court and elsewhere that designation of critical habitat does not have an economic impact above and beyond listing of a species.  One circuit court of appeals has invalidated this “incremental” approach to the evaluation of the economic impacts of critical habitat.  New Mexico Cattle Grower’s Assn. v. U.S. Fish and Wildlife Service (10 Cir. May 11, 2001).  Analysts have also criticized the incremental approach, noting that the recent rash of court orders requiring designation of critical habitat under strict deadlines have been supported by inadequate economic analyses. 

 

In New Mexico Cattle Growers Assn.  v. U.S. Fish and Wildlife Service, the court held that the baseline approach to economic analysis used by the Service there was not in accord with the language or intent of the ESA.  The court further took note of the Sierra Club decision and stated: “[T]he regulation’s definition of the jeopardy standard as fully encompassing the adverse modification standard renders any purported economic analysis done utilizing the baseline approach virtually meaningless. We are compelled by the canons of statutory interpretation to give some effect to the congressional directive that economic impacts be considered at the time of critical habitat designation.”  In accordance with the 10th Circuit decision, the Services shall avoid their previous position that there is only “incremental” economic impact from the designation of critical habitat above and beyond the listing of the species. 

 

Indeed, recent independent studies have continued to challenge the methods by which the Services conduct economic analyses.  A recent case study by the California Resource Management Institute suggests that the FWS underestimated the costs of the critical habitat designation for vernal pool species in California by seven to fourteen times. 

 

Accordingly, NAHB recommends that the Service should specify, in guidance, certain factors for consideration in an economics analysis for critical habitat designations. For example, guidance could specify that areas can be excluded from critical habitat designation in light of studies showing the designation's impact on: public works projects; transportation projects; job loss; the availability and cost of housing; the ability of affected counties, cities and municipalities to issue development approvals and conduct land use planning processes within their respective jurisdictions; increased costs to navigate heightened regulatory processes; impacts on the lending and banking communities; and the price and tax implications on affected real estate. 

 

Moreover, NAHB suggests that Services should consider the cumulative economic impacts of critical habitat designations.  Had the Services been compelled to consider the cumulative economic consequences that flow from multiple critical habitat designations, it is doubtful that we would see the myriad of designations that have caused 1/3 of the State of California to be designated as critical habitat. 

 

The costs attributed to critical habitat designations can be staggering.  For example, Arizonans living in Pima and Pinal counties will be faced with as much as $108 million in costs as a result of proposed Pygmy Owl critical habitat.  It is for this reason that NAHB believes the Services must be made to follow their statutory mandate to exclude any area from the designation of critical habitat if the economic and other impacts of the designation outweigh the benefits of the designation. 

 

Furthermore, NAHB believes that the Services must foster a notion of predictability and transparency through the establishment of clear criteria and formal procedures for the process by which the benefits of inclusion and exclusion are balanced under §1533(b)(2).  Of course, it goes without saying that the Services should not exclude specific areas if they determine, based on the best available science that the exclusion will result in the extinction of the species.  As mentioned previously, our members are committed to environmental protection and species conservation, but are looking to the Services to adopt policies and promulgate regulations in processes that are legal, equitable, fair, and consistent with the ESA and its intent and interpretation.

 

Conclusion

 

In conclusion, NAHB supports the goals of the ESA in protecting endangered and threatened species and their habitats, but these protection measures must be based on reliable, accurate and solid biological and scientific data.  Our members are often prevented from developing their property or must submit to extensive mitigation requirements based upon what are often hypothetical and speculative impacts to species and their habitats.  Continuing to apply unsound, unreviewable, and at times fraudulent evidence in ESA decisions could endanger the very species it seeks to protect, and it will certainly continue to unfairly raise the cost of housing, lock families out of the housing market, and have harmful effects on our economic recovery.

 

Congress intended critical habitat to encompass limited geographic scope.   The ESA restricts critical habitat to those “specific” areas that are found to be “essential” to species conservation—based on the best available scientific data, and after considering the economic impacts of the designation.  However, the Services usually designate critical habitat only as the result of litigation filed by environmental groups.  Accordingly, the Services fail to engage in the rigorous scientific and economic analyses required by the Act—and paint with too broad a brush and improperly include huge swaths of historic and potential habitat areas within the “critical” habitat designation.  NAHB looks forward to continuing to work with this Committee, with Congress, and with the Services to ensure that Congress’ intent with respect to critical habitat is properly carried out.  

 

Mr. Chairman, I appreciate your leadership on this important issue, and thank you for your consideration of NAHB’s views.